The band wasn’t offering up “Stormy Weather” at the October 11 Economic Outlook Conference hosted by UNCW, but it wasn’t playing “Blue Skies,” either. Three speakers who discussed the residential real estate market predicted continued cloudy conditions, but did point to a few rays of sunshine.

Thomas Simpson, former senior officer of the board of governors of the Federal Reserve in Washington, D.C., and now executive in residence at the university’s Cameron School of Business, said that the front has stalled over the nation’s residential home sales.

“Nationally, construction (of new homes) is weak, and turnover of existing homes is low. It’s a situation we have not dealt with in this country since the 1930s,” he said. “The situation is feeding on itself: people who would like to buy are losing equity in the home they are selling, and underwriting standards for mortgages are pretty tight.

“For the nation as a whole, there’s still a large inventory that needs to be absorbed. In addition to what the National Association of Realtors posts, there is a ‘shadow inventory’ of homes that are in foreclosure or will be in foreclosure. This is bad news for the construction industry.”

Simpson predicted that real estate prices will probably drop a little more, but said they are not too far out of line with what might be considered appropriate.

“The dynamic at work here is that foreclosed homes and foreclosure-prone properties will keep prices below par for a while,” he said. “This will be concentrated over the next year or so, and then things should stabilize.”

Debbie Mitchell, an agent with Intracoastal Realty, is seeing some patches of blue among the clouds. She underscored the fact that residential sales in the Wilmington area were up 10 percent from July 1 to mid-October of this year over the same period last year.

“High-end sales are up significantly, and a lot of investors think that prices have bottomed out, so this is a good time to buy,” she said. “As inventory drops, prices will stabilize.”

William “Woody” Hall, professor of economics at the Cameron School, looked at the local real estate market in the context of the overall economic picture in the Wilmington Metropolitan Statistical Area (MSA). He pointed out that average economic growth in the years 2002 to 2010 was about 4.5 percent, but that growth has fallen to about 2.4 percent in 2011 and is predicted to be about 2.2 in 2012.

“If we look back in time, we see that we must have a growth rate of at least 3 percent to just keep the rate of unemployment stable,” he said. “If history repeats itself, we won’t see appreciable growth until 2013.”

Hall said monthly real estate sales data for New Hanover and Brunswick counties from January 2005 through August 2011 is “all over the place” but shows a typical annual cycle of slow sales early in each year, growing and peaking during the summer months and gradually decreasing during the fall.

That pattern has not changed, he said, but the lows and highs have been lower since the recession hit, and there is a 70 percent difference between the highest point during this period – in 2005 – and the lowest.